Landlords owning properties through limited companies hits record high – LandlordZONE

The number of companies set up by landlords to own properties has doubled over the past five years to 300,000 and is rapidly becoming the norm for new entrants to the market, latest figures show.

Estate agency Hamptons, which has completed the research, says the rise is down to newbie investors seeking the most tax-efficient way to invest, and existing landlords transferring their properties from personal to company to avoid the reductions in mortgage interest tax relief brought in by the Government in England in recent years.

This means some 11% of landlords now operate run their properties through this kind of limited company structure, based on recent HMRC figures that revealed there are 2.65 million landlords in the UK.

This is the first time the number has passed the 300,000 mark and Hamptons says it is likely that more buy-to-let companies will be set up in 2022 than in any previous year, despite there being fewer buy-to-let homes bought this year in comparison to last year.

Tax bill

This rise has been prompted by rising rates as existing landlords move properties they already own from personal to company names in a bid to offset rising mortgage interest against their tax bill and increase their profits.

The estate agency also estimates that some 40% of all new buy-to-let purchases are now go through a limited company, up from 10% in 2016.

But while more properties are being bought this way than before, it has slowed recently has more companies were dissolved after landlords sold up properties as some seek less onerous investment vehicles.

landlords tax

“The record number of landlords now holding properties in a company means it’s rapidly becoming mainstream among investors,” says Aneisha Beveridge (pictured), Head of Research at Hamptons.

“The number of new incorporations is likely to remain relatively high over the next 12 months on the back of the stamp duty cut which saves the average investor just under £2k when moving a buy-to-let from personal to company names.”

Read more: Complete guide to tax for landlords for 2022/23.

Source link

Sharing Is Caring:

Leave a Comment